Buying a house w/o an agent - will I save 3%?

[Anonymous]

We're looking to buy a house in the next few months, and we're considering not using a buyer's agent. Will we be able to negotiate 3% (or slightly less) off the home sales price?

We've been through the buying process before, and are willing to do the "grunt work" and research on our own. We'd like to buy as much house as we can and minimize the fees. What do you think? Is this a bad idea?

Any feedback appreciated!

[Anonymous]

I think you only benefit from not using an agent if you are the seller. The commission fees come out of the final check the seller is given so the buyer isn't really paying any commission. Both agents are paid by the seller's cut.

[Anonymous]

The commission is negotiated between the listing broker and the seller. If you use a "buyer's agent" then all that happen is the the listing agent splits the commission. The only person that benefits if you do not use an agent is the listing agent - they essentially act as both buyers and sellers agent and get to keep the full commission.

[Anonymous]

The PP is right - the seller's agent would just keep the full 6% commission. Agents justify this by saying they would have to help you do all your work for the sale to close in addition to doing it for their sellers.

[Anonymous]

I'm the original poster. Thanks for the feedback. Looks like I might as well get an agent, since I'll be paying for it anyways.

Thanks!

[Anonymous]

You can use a buyer agent who is welling to give you a cut of his 3%.
Our agent back then gave us a check for $10k toward our house in 2004 or about 1.5%.

My BIL is an agent in MD and I know he would be happy to do that for you.
That way you can see all the house that you are not able to w/o an agent but you do most of the searching yourself and go to open houses. It is a win/win, some folks can't due to broker agreement but some can.

[Anonymous]

Anonymous wrote:You can use a buyer agent who is welling to give you a cut of his 3%.
Our agent back then gave us a check for $10k toward our house in 2004 or about 1.5%.

My BIL is an agent in MD and I know he would be happy to do that for you.
That way you can see all the house that you are not able to w/o an agent but you do most of the searching yourself and go to open houses. It is a win/win, some folks can't due to broker agreement but some can.

Hmm, I am assuming that this was done outside of the settlement process. I could see a mortgage company looking unfavorable at this arrangement. By taking the kickback you are messing with the loan to value ratio of the house. Of course, not a issue if you are paying all cash in the purchase.

[Anonymous]

OP,
You can save money if the seller does not have an agent, and is selling "for sale by owner." Look on craigslist and www.homesalez.com and similar sites to find people who want to sell without any agents involved. The seller will be able to reduce the purchase price by 6% or(or you can negotiate down 6%). Beware though that FSBO's often price their homes too high for the market. You just need to negotiate it down. We purchased our home this way, and bought our place for 20K less than what other people were paying, simply b/c there were no agents involved. We did use a reputable title company to do the closing, paperwork, etc.

[Anonymous]

We have, in the past, called agents who have houses listed or talked to them at open houses and said, look, we don't have an agent, if we buy without one can we work out a deal for the 3% that would go to a buyer's agent? Sometimes they don't get it, and then we say, fine, we'll get an agent and you can give them the percentage, and then they say, ok, we could work something out. My husband loves to bargain (buying cars, etc) and feels more comfortable with these conversations than I do. If you know the area and are comfortable with the process, it's entirely reasonable to buy without an agent.

Given the current market, it makes sense to try. Some FSBOs are less flexible though--they're trying to keep the % that would go to an agent.

[Anonymous]

My one friend bought a house without an agent from a FSBO. Since neither had an agent, they cut a very good percentage off of the asking price of the house. In this market where things aren't budging, I would bid 3% less than what you would otherwise bid (and people don't get full list price anymore).

[Anonymous]

Kick-backs are illegal. Whether agent to agent, agent to lender, lender to agent, lender to buyer, seller to agent, agent to seller, agent to buyer, POC seller to buyer, etc.

Do not ever let anyone convince you otherwise.

[Anonymous]

Second the 19:00 PP with one clarification: a kick-back is a payment not disclosed on the paperwork at settlement.

Also, if the amount being put down by the buyer or source of these funds is misrepresented to the mortgagor, it is loan fraud.

The only legal way for you to make this worth your while is to negotiate down the asking price. If you get a buyer's agent and negotiate down their commission, that is fine but don't accept an undisclosed payment from the agent; have the difference negotiated taken off the asking price.

[Anonymous]

Mortgage lender here. Most of the PPs are correct about it having to be disclosed on the contract. However, the PP that said it would mess up the loan to value ratio is incorrect. A buyer's agent splitting their commission is semi-common and is always done with companies like ziprealty.com. However, any help (whether it be seller's assistance or a commission split w/ agent) is considered "interested party contribution". Each loan program has a maximum amount someone involved in transaction can contribute to the buyer (usually 3% or 6% depending on down payment). To reiterate, this is a buyer's market so you can definitely negotiate ANYthing.

[Anonymous]

Thank you PP, I feel a lot better...we never thought it was illegal since it was done infront of all parties involved back in 2004.
Our agent would have NOT allowed if it was.

[Anonymous]

one more thought here - as someone who has used an exclusive buyer's agent 3 times now, i highly recommend the process. i do the research myself as to which houses i want to look at and which appeal to me, and my agent takes me, but to me, the real important part is that the agent will do the negotiating for you and knows when somethign is off. my buyer's agent knows what are red flags to look for in a house when we go (look at the pipes in the basement, look for leaks, etc) while i'm ooh'ing and aah'ing at the features. in addition, they know how to smarly negotiate things to ultimately save you money. for example - my agent has been able to successfully negotiate $$ back (aka credits) due to things that you might not otherwise think to negotiate. I woudl never buy a house without a buyer's agent!